The purposes of this proposed research are (1) to examine the effects of health literacy on health and health service utilization, and (2) to investigate whether effects of health literacy are moderated by the support and networks of an individual's social environment. The target population is Medicare enrollees. Compared to their younger counterparts, older adults are likely to use more health services because of greater disease burden. With lower health literacy, they also are more likely to have problems following medical directions and suffer from adverse medical consequences. The past several years have witnessed a growing societal concern with low health literacy and its health toll. Research has shown that low health literacy may be associated with low health status and increased rates of hospitalization. However, it remains unclear how health literacy affects health and health service utilization. Furthermore, studies have shown significant individual variation in the adaptation to health literacy problems. In response to these problems, we plan to a conduct a face-to-face questionnaire survey and use information collected from computerized hospital records and medical charts to address the following research questions: (1) Does health literacy have direct or indirect effects on health status and health service utilization? If the effects are indirect, what are the casual mechanisms or intermediate steps that link low health literacy to poor health status and high utilization of hospital care? (2) Do social support and networks moderate the effects of health literacy on health and health service utilization? For example, does social support interact with health literacy in a way that the negative impact of low health literacy on health outcomes might be reduced by increased social support? Better knowledge of how health literacy are related to health and health service utilization will help policy-makers and health care providers identify and eliminate the missing links in the delivery of care for elderly patients with low health literacy. To the extent that there are moderating and protective effects of social supports and networks, available resources in the community could be employed to improve the quality of care for elderly patients. Furthermore, interventional efforts could be designed more efficiently and more effectively by focusing on those elderly patients who not only qualify as literacy incompetent but also lack the resources, support, tools, and skills to bridge the unmet literacy demand of their health conditions.